While the US economy considerably outperformed its DM peers in Q3, we think that all advanced economies will suffer a weak Q4. High interest rates are weighing on credit growth, and a further rise in debt servicing costs in the coming quarters is likely contribute to further economic weakness. Headline inflation will continue to fall, and the combination of weaker activity and a gradual loosening in the labour market should exert downward pressure on core rates too. Accordingly, we doubt that the ‘higher for longer’ rhetoric from policymakers will last, and we expect central banks to start cutting rates next year. Meanwhile, in China, policy support has already been increased, but this is unlikely to do much more than put a floor under current rates of growth.
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